Deck 19: The Political Economy of International Trade Policy

Question 1

The domestic politics of international trade are asymmetric due to sunk resources and the rents on those resources.

Answer 1

True

Question 2

Trade policy consists of agreements among countries, domestic laws pertaining to international trade, and procedures for administering those laws and resolving disputes.

Answer 2

True

Question 3

The Kennedy Round of GATT negotiations incorporated provisions in Article VI allowing domestic laws to include antidumping measures.

Answer 3

True

Question 4

The competitive theory of international trade is based on the losses from trade.

Question 5

The focus of the Tokyo Round of GATT was on agricultural subsidies.

Question 6

The theory of comparative advantage is based on the assumption of perfectly competitive markets.

Question 7

TRIPS, or Trade Related Aspects of Intellectual Property Rights, provides a narrow protection to intellectual property and is, thus, excluded from the WTO dispute settlement system.

Question 8

Gains from trade are evident when one country can produce a good more efficiently than another country, and the latter country can produce a different good more efficiently than can the former country.

Question 9

The central principle of the WTO agreements is manifested in the most favored nation (MFN) requirement that each signatory accord all other signatories the most favorable terms for trade provided to any country.

Question 10

Agriculture has been the sector with the smallest distortions in trade.

Question 11

The focus of international trade policy through the 1960s was on tariffs.

Question 12

The Smoot-Hawley Act of 1930 helped reduce the depth and duration of the Great Depression by decreasing tariffs dramatically.

Question 13

The theory of comparative advantage implies that intervention by governments in perfectly competitive domestic or international markets will increase aggregate well-being.

Question 14

In the aftermath of World War II, the sudden increase in trade barriers was largely the result of U.S. hegemony.

Question 15

A number of regional trade agreements such as the North American Free Trade Agreement (NAFTA) and the treaties that established the single market in the European Union, have reduced barriers and increased trade.

Question 16

In the absence of trade, the consumption possibilities of each country are its own production possibilities.

Question 17

At the conclusion of World War II, a group of countries led by the United States established the International Trade Organization (ITO)..

Question 18

Trade policy does not depend on the market and nonmarket strategies of private interests.

Question 19

The General Agreement on Trade in Services (GATS) covers all services and provides for MFN and national treatment.

Question 20

The law of comparative advantage provides the basic rationale for free trade-all countries, even those with an absolute disadvantage, can gain from trade.

Question 21

The competitive theory of international trade is based on the ________.

A) budget deficits accumulated over a period of time
B) trade deficits accumulated over a period of time
C) gains from trade
D) rate of investments

Question 22

Which of the following is true with regard to the competitive theory of international trade?

A) The gains from trade can be demonstrated when two countries either determine the terms of their trade through bargaining or trade goods in a competitive market.
B) The competitive theory of international trade is based on the trade deficits accumulated over a period of time.
C) In the absence of trade, the consumption possibilities of each country are far below its own production possibilities.
D) Gains from trade do not occur if there are differences in the relative prices of untraded factor inputs such as labor.

Question 23

The Schengen Agreement established, subject to certain exceptions, free trade among Canada, Mexico, and the United States.

Question 24

After World War II, the reductions in trade barriers were primarily the result of which country's dominance?

A) Great Britain
B) China
C) USSR
D) the United States of America

Question 25

The central principle of the WTO agreements is embodied in which of the following requirements?

A) most favored nation
B) reform-friendly state
C) developed nation
D) democratic free state

Question 26

The major components of U.S. trade law are embodied in the Trade Act of 1974 and the Tariff Act of 1930.

Question 27

Article XVI of the GATT ________.

A) allows for temporary safeguard relief from imports
B) is the subsidies code
C) covers antidumping and countervailing duties
D) sets a framework for the elimination of quantitative restrictions on trade

Question 28

With regard to trade disputes, the European Union maintains a set of preferences for the overseas territories and former colonies of its member states.

Question 29

The Uruguay Round negotiators reached a new Government Procurement Agreement (GPA), which is a ________ agreement among 39 WTO members.

A) bilateral
B) unilateral
C) plurilateral
D) multilateral

Question 30

The theory of comparative advantage is based on the assumption of________.

A) perfectly regulated markets
B) perfectly monopolistic markets
C) perfectly competitive markets
D) perfectly competitive innovation

Question 31

Since the ________, which raised tariffs dramatically and contributed to the depth and duration of the Great Depression, the United States and other developed countries have supported reductions in tariffs and other barriers to international trade.

A) Reciprocal Trade Agreement Act
B) Neutrality Act of 1935
C) Trade Adjustment Assistance Act
D) Smoot-Hawley Act of 1930

Question 32

According to the U.S .Constitution, the Congress is not vested with the power "to regulate commerce with foreign nations" and to "lay and collect duties."

Question 33

The Uruguay Round and follow-up agreements were generally unsuccessful, and the WTO dispute settlement process had been largely ineffective.

Question 34

The International Trade Organization (ITO) was established by a group of nations, under the leadership of ________.

A) Japan
B) the USSR.
C) the United States
D) China

Question 35

Article VI of the GATT ________.

A) allows for temporary safeguard relief from imports
B) allows exceptions for balance of payments problems of developing countries
C) covers antidumping and countervailing duties
D) sets a framework for the elimination of quantitative restrictions on trade

Question 36

Why do countries generally gain from multilateral reductions in tariff and nontariff barriers?

A) because liberalized trade policy is beneficial in the aggregate
B) because the politics of international trade policy is majoritarian
C) because liberalized trade policy supports market monopolies
D) because the distributive consequences of a liberalized trade policy are not uniform

Question 37

Article(s) XX and XXI of the GATT ________.

A) set a framework for the elimination of quantitative restrictions on trade
B) provide exceptions to the free trade provisions of the other articles
C) are the subsidies code
D) cover antidumping and countervailing duties

Question 38

The sector in which there has been the greatest distortion in trade is ________.

A) transportation
B) iron and steel
C) heavy machinery
D) agriculture

Question 39

The politics of international trade policy is driven by ________, which arises from the interactions between international trade policy and the domestic economy.

A) domestic politics
B) international peak organizations
C) the aggregate well-being of the country
D) the aggregate cost of social externalities

Question 40

The International Trade Organization (ITO) was formed at the conclusion of ________.

A) World War I
B) the Vietnam war
C) the Gulf war
D) World War II

Question 41

Who bears the cost of protectionism and how?

Question 42

The North American Free Trade Agreement (NAFTA) established, subject to certain exceptions, free trade among ________.

A) Great Britain, the United States, and Japan
B) Canada, Mexico, and the United States
C) Great Britain, France, and Canada
D) the United States, India, and Japan

Question 43

Outline the structure of the U.S. trade policy.

Question 44

Which of the following is true with regard to the NAFTA?

A) NAFTA was an expansion of the United States-Japan Free Trade Agreement that had been in effect since 1981.
B) NAFTA excluded transition provisions and favored a rapid phaseout of trade barriers.
C) NAFTA was an expansion of the United States-Canada Free Trade Agreement that had been in effect since 1988.
D) NAFTA did not provide for the elimination of tariff and nontariff barriers.

Question 45

A major achievement of the ________ Round was to establish the WTO Dispute Settlement Body (DSB) to hear disputes and issue binding orders to resolve them.

A) Doha
B) Uruguay
C) Kennedy
D)Tokyo

Question 46

Which of the following is true of the Super 301?

A) Super 301 convinced most countries to pursue market opening through unilateral negotiations under the WTO.
B) Super 301 contributed substantially to the strengthening of trade relations between the United States and the European Union.
C) Super 301 deems negotiation as the most effective means of addressing foreign barriers to trade.
D) Super 301 provided for mandatory sanctions against countries that engaged in unfair trade practices that injured U.S. industries.

Question 47

How can the relative inefficiency of domestic industries be addressed?

A) those injured may be compensated under the Reciprocal Trade Agreement Act
B) those injured may be compensated under the Trade Adjustment Assistance Act
C) relief can be granted in the form of permanent tariffs and the renewal of previously granted trade concessions
D) protection is provided by stimulating imports

Question 48

Protection applies to________,

A) tax exemptions for promoting green technology
B) high domestic wages
C) stringent labor laws
D) predatory trade practices

Question 49

The negotiations in the ________ Round were to pay special attention to the situations of developing countries.

A) Doha
B) Uruguay
C) Kennedy
D)Tokyo

Question 50

Which of the following is true about the cost of protectionism?

A) Organized consumer groups have been largely active in cases involving protection of domestic industries.
B) Ultimately, the cost of protectionism is borne by producers.
C) The cost of protectionism is ultimately borne by consumers.
D) Individual consumers are fairly likely to act politically on trade protection issues.

Question 51

Write a short note on the competitive theory of international trade.

Question 52

Discuss the various aspects of the Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Question 53

In relation to the WTO Dispute Settlement Body (DSB), ________ has been involved in more disputes than any other country.

A) the United States
B) Venezuela
C) Brazil
D) North Korea

Question 54

What were the factors responsible for the formation of the General Agreement on Trade in Services (GATS)?

Question 55

Article 1, Section 8 of the U.S. Constitution gives ________ the power "to regulate commerce with foreign nations" and to "lay and collect duties."

A) the secretary of state
B) the Congress
C) domestic peak organizations
D) multinational corporations